Finance Ministry asks DoT to auction broadband spectrum

With revenues under pressure and market conditions not favouring disinvestment, the Finance Ministry is putting pressure on the Telecom Department to go in for a fresh round of broadband spectrum auction this fiscal.

The Department of Economic Affairs has yet again asked the Department of Telecom to sell available broadband spectrum at the earliest to meet non-tax revenue targets. The DoT has 20 Mhz of broadband spectrum, which is enough for accommodating one operator in most of the telecom circle.

Mr R. Gopalan, Secretary, Department of Economic Affairs, in a letter to the Secretary, DoT, said that the Government had factored Rs 13,000 crore as non-tax revenue receipts in the Budget Estimates 2011-12.

“I hope that the DoT would have initiated the process of auctioning broadband wireless access (BWA) spectrum to achieve the targets in the current financial year. I would request you to kindly intimate the status on the action taken in the matter at the earliest possible,” Mr Gopalan said in the letter dated July 8.

This is the second letter from the Finance Ministry to the DoT in the last two months indicating the level of desperation to get more revenues. In May, the then Finance Secretary, Ms Sushma Nath, had made a similar request urging the DoT to identify airwaves that can be sold immediately.

“The non-tax receipt from the auction of telecom spectrum is an important and substantial component of the overall non-tax receipts projected in BE 2011-12. I would request you to take all the necessary steps so that there is no shortfall against the projected receipts from the auction of telecom spectrum,” Ms Nath had written to the DoT.

But the DoT had so far not acted on conducting auction on grounds that the defence forces were not vacating air waves.

Mr Gopalan has therefore identified 20 Mhz in the 2.3 Ghz band to be sold as it is already available with the DoT. This frequency band is the same one which was sold in 2010 to private operators.

The Government got nearly Rs 39,000 crore from selling two slots of 20 Mhz each in this band.

Qualcomm, Bharti Airtel, Aircel, Tikona and Reliance Infotel are among those who own spectrum in the 2.3 Ghz band. These operators are planning to launch fourth generation (4G) based broadband services using this spectrum.

If the DoT acts on the Finance Ministry's proposal to sell one more chunk of 20 Mhz spectrum, then it would increase competition in this segment apart from generating revenues for the Government.

But the problem for the DoT will be to identify 20 Mhz in all the circles.

According to information available on the DoT Web site, additional spectrum in the 2.3 Ghz band is available only in about 15 of the 21 telecom circles.

The DoT does not have airwaves in States including Tamil Nadu, Rajasthan and Kolkata. This means that no operator will be able to get pan India airwaves, which in turn could reduce the revenue for the Government. The other issue is whether telecom companies have the appetite to participate in another auction so soon given that they have invested nearly Rs 1 lakh crore in last year's auctions.

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